Almost 50% of businesses are reducing hiring efforts due to Rachel Reeves Research indicates an increase in National Insurance contributions.
According to a survey conducted among 254 firms employing over 260,000 individuals, 46 percent stated they plan to reduce recruitment due to an increase set to take place this coming Sunday.
The Chancellor has imposed an increase in the contribution rates for employers from 13.8% to 15%, resulting in an additional £25 billion in taxes paid by these businesses and pushing numerous financially troubled firms nearer to bankruptcy.
The increase in NI, announced in September's update, Budget , has increased the stress on companies that are simultaneously dealing with elevated minimum wage requirements, higher business rates, and the expenses associated with complying with new workers' rights regulations.
A survey conducted by Reed, a recruitment firm, revealed that numerous businesses reported having delayed or canceled hiring processes.
Nearly sixty-seven percent of participants expressed concerns regarding the forthcoming alterations to National Insurance contributions. They anticipated an approximate reduction of twenty-nine percent in their yearly earnings once these modifications came into effect.
The rise in National Insurance contributions is leading 16 percent of companies to initiate layoffs.
Approximately 19 percent indicated that they were delaying or canceling wage reviews. Furthermore, 22 percent mentioned that they had to implement budget reductions in specific divisions due to these alterations.
London has faced significant challenges, as 60 percent report this issue affecting their recruitment choices, whereas only 38 percent of companies located outside London say the same.
And 24 per cent of businesses from London said they were already making redundancies in response to the NI increase, versus 12 per cent in the rest of the country. The rise in the national minimum wage this month, from £11.44 an hour to £12.21 for everyone employed aged 21 and over, has also hit recruitment, with 26 per cent saying they had paused hiring and 35 per cent saying it had significantly affected their ability to hire.
James Reed, Chairman and CEO of the Reed Group, stated: "Given the current condition of public finances, everyone acknowledges that tough choices must be made. However, we had cautioned at the time the rise in employers' National Insurance was introduced; it acted as a levy on employment, which our predictions have since confirmed."
'The findings of our survey clearly demonstrate the impact and suggest the jobs market will remain under pressure. The hole this tax increase has made in a million company balance sheets is regrettable.
These are challenging times for businesses aiming to recruit and grow, which will consequently result in slower economic expansion.
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